Representative French Hill (R-Arkansas) and Rep. Bill Foster (D-Illinois) are the two Congressmen who have recently sent a letter to the country’s central bank, recommending to develop a Digital US Dollar.
Digital Version of U.S Dollar
The news was first reported by Bloomberg Law, stating that the lawmakers are showing serious concern if at all a private company or any other country develops a widely-used cryptocurrency. The central point is that USD is the global currency and with the development of cryptocurrency like Libra which is designed to use across the world, it may pose a direct threat to USD. As per the congressmen, the Fed has the right to create as well as manage the US currency policy – besides, it can also create a digital version of USD. The letter reads that;
“We are concerned that the primacy of the U.S. Dollar could be in long-term jeopardy from the wide adoption of digital fiat currencies. Internationally, the Bank for International Settlements conducted a study that found that over 40 countries around the world have currently developed or are looking into developing a digital currency.”
The lawmakers in a letter elaborate that over 40 countries are into the emerging trend of developing a digital currency. However, the recent example could be a digital currency by China which may launch later this year or in early 2020. In fact, the Chinese government official revealed that the digital version of the yuan can function just like a note, without an internet connection.
Looks like the congressmen closely studied China’s upcoming cryptocurrency which might be the reason Congressmen wrote in a letter, “With the potential for digital currencies to further take on the characteristics and utility of paper money”, may be crucial for Fed to launch the digital version of US dollar.
Undoubtedly, the letter specifies two major players which might end the dominance of USD– Libra as a currency by private companies and unnamed upcoming digital currency by China. Moreover, the letter specifically mentioned the Libra stablecoin project to be developed by Facebook, a similar move followed by JP Morgan and Wells Fargo. The letter reads;
“The Facebook/Libra proposal, if implemented could remove important aspects of financial governance outside of U.S. jurisdiction.”
Perhaps, entry of these digital currencies is considered as the smart move to end the US Dollar dominance. As Mark Carney, Governor of Bank of England publicly expressed his views on digital currencies like Libra could replace the dollar.
Conclusively, the letter asks a couple of key questions, if answered, it could clarify the US’s stance towards the crypto industry. Notably, few questions include “Whether the Fed is currently looking into developing a digital currency, what might prevent the Fed from developing the digital version of the USD, if the Fed is considering to develop digital currency and what market risks or other issues it may pose.
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